Property Tax Challenges are Now a Statewide Issue

It's not just Franklin, where voters have twice narrowly blocked attempts to override the Prop 2 1/2 tax limits and, more recently, discussion has again swirled around the pros and cons of a split tax rate.  No, it's a problem everywhere. In fact, property taxes are looking like the next act in the Massachusetts affordability crisis drama, with scenes unfolding this week at Boston City Hall and in the Massachusetts Senate.

Labor unions and community organizations plan to urge state legislators to temporarily shift more of the property tax burden on to commercial owners as a way of blunting the impact of residential property tax hikes that Boston Mayor Michelle Wu says will average 13%.

Meanwhile, the Massachusetts Senate was planning to take up an order (S 2758) filed Nov. 2 by Co-Chairman James Eldridge granting the Joint Committee on Revenue more time to make decisions on five Senate bills, including one (S 1933) filed by Sens. Will Brownsberger and Nick Collins "to prevent property tax bill shocks." The committee has until until March 6, 2026 to make decisions on the bills.

The Brownsberger-Collins bill allows a municipality to protect property taxpayers who are over 65, MassHealth eligible or unemployed from shocks that occur in the third quarter of a fiscal year in which residential property taxes are rising by more than 10%. Under the proposal, municipalities could opt in during a tax-shock year, decide which eligible groups to cover, and reduce a homeowner’s third- or fourth-quarter bill by a percentage tied to the annual residential tax levy jump.

Senate Democrats already derailed Mayor Wu's 2024 push for a property tax shift to protect residential owners and this session have declined to send the city's latest home rule petition to a committee for a public hearing. Unlike Wu’s stalled proposal, the Brownsberger–Collins plan offers narrowly targeted relief without altering statewide tax-cap rules.

Commercial property interest in Boston say that sector can't afford the tax burden shift because some property values have sunk as work and shopping habits changed in recent years, leading to less foot traffic in the city.

Some of the same issues are playing out in other cities and towns. The Massachusetts Municipal Association published a recent report that found many municipalities are taxing up to the limits allowed under Proposition 2 1/2, the voter law that limits tax increases. Despite that approach to taxation and considerable local aid allocations from the state, many municipalities say they are unable to deliver desired levels of local services.

Also pending in the Senate’s extension order is S 1935, also filed by Collins, which would let cities and towns issue uniform rebates to households that received the residential exemption in the prior fiscal year. The rebates would be calculated by local treasurers, funded by municipal appropriations, and could not reduce a property's taxable value below 10% of fair cash value unless otherwise allowed under existing law.

A Sen. Dylan Fernandes' bill (S 2004) also being extended would create two statewide trust funds — one for local newspapers and another for pre-K and after-school programs — financed by a 5% excise tax on digital advertising revenues earned within Massachusetts by companies with more than $25 million in such revenue. Of that, 15% of the revenue would flow to local journalism grants, while 85% would support early education and child care programs, with both funds administered by state economic and education agencies.